Slower Chinese inflation opens door to more easing

NEW YORK (CNNMoney) -- Prices are tumbling in China, giving the government more leeway to stimulate the world's second-largest economy.

China's annual inflation rate fell to 2.2% in June, the government's National Bureau of Statistics reported Monday. That's the lowest inflation rate in nearly two-and-a-half years and comes as prices have been falling, especially on food.

Some economists have raised fears of a so-called hard landing in China, in which economic growth slows sharply. Others believe the government still has plenty of room to act, especially now that rapid inflation is not a problem.

"Inflation continued to ease at a pace slightly faster than expected, which leaves sufficient room for Beijing to take further easing actions," Sun Junwei, HSBC's China economist, said in a note.

Last month, Fitch Ratings researchers predicted the Chinese economy will grow 8% this year, well below the average of 10.5% per year between 2007 and 2011.

Even so, Fitch said China's current slowdown does not compare with its much sharper slump in late 2008.